How to Use Crowdfunding to Cover Health-Care Bills

With the cost of health care steadily rising, consumers are turning to strangers on the Internet to help foot their medical bills.

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Health-care costs have jumped considerably over the last decade. From 1999 to 2009, the average monthly insurance cost for a family of four jumped to $1,420 from $805, according to the Rand Corp. And that doesn't include out-of-pocket costs for hospital visits, unexpected surgeries, medications for the insured, underinsured and uninsured alike. The trend has forced cash-strapped patients to use crowdfunding, online peer funding that has individuals unite for a common goal and contribute relatively small amounts to a request for funds.

According to Duke Health, medical bills are the leading cause of bankruptcies in America.

Entrepreneurs have been using social fundraising to get their businesses up and running for several years, but consumers—particularly those facing long-term medical problems and illness—are now using it to help pay mounting bills.

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“Some of the most viral campaigns on Fundly have been campaigns for health-care expenses,” says Dave Boyce, CEO of the site that has raised more than $230 million. He estimates at least several hundred of the site's 11,000 fundraising campaigns are medical-related.

Many of the health crowdfunding sites' beneficiaries are aging boomers faced with mounting health challenges: about 23%of GiveForward's users are over age 50, and about 35% of YouCaring's beneficiaries are older than 50.

Vicki Polin, 52, had $200 when she drove 400 miles for emergency heart treatment at the Mayo Clinic without knowing how she was going to pay her bills. But before she was discharged from the hospital, a friend had raised $1,000 for her on YouCaring.com to pay for coinsurance and related expenses. She's raised about $7,000 total on the site.

“The money not only means I get to live, it also means that there are so many people out there who want to help,” she says. “I was amazed at the number of people who donated anonymously.”

But graying boomers aren't the only ones harnessing the power of the internet to raise money for crippling medical expenses. A recent GiveForward campaign in February raised more than $300,000 in just a few days to pay for out-of-pocket medical expenses following the death of popular X Games gold medalist and freeskiing pioneer, Sarah Burke, according to a GiveForward spokeswoman.

The sites also help users connect their profile pages to social media accounts to solicit donations instantly. GiveForward, which started about three years ago, says it's helped families raise more than $11 million to help pay for out-of-pocket health-care costs.

When considering fundraising online, Polin recommends researching each site's processing fees, how quickly funds transfer and whether donations will be immediately available. For example, YouCaring.com doesn't charge a processing fee, but PayPal takes 3% of funds donated. Other sites may charge up to 7% and some only deposit donations once a pre-determined goal has been reached.

When requesting financial health care help from others, Boyce says fundraisers should include photos and frequent updates on their conditions, which makes donors feel personally connected to the patient in need. Not including enough information looks suspicious and could get a fundraiser booted from the site, adds YouCaring marketing director Naomi Ketcher. Fundraisers should also regularly thank donors, publicly and privately.

“Email reminders are a good way to solicit donations, but harassing people is not,” adds Andrew Schrage, co-owner of personal finance site Moneycrashers.com. “Don't email every day, and don't repeatedly send out the same message. “Whatever your plans are for the money, include this information specifically in your story. You always want to be as upfront as possible.”

“Do not be obtuse or vague,” Boyce adds. “You can make [supporters] feel good about their contribution by keeping them in the loop.”

“Even after the giving has stopped, that's no reason to stop showing gratitude,” Schrage adds. “Continue to send updates on the person's status after the campaign has ended.”